Economic Relations between ASEAN and Japan

At the Third ASEAN Economic Ministers (AEM) Ministry of International Trade and Industry (MITI) Meeting in September 1994, the Japanese Minister of International Trade and Industry welcomed ASEAN's decision to quicken the pace of implementing AFTA. Japanese multinational companies (MNCs) had been encouraged to take advantage of the increasing momentum of trade liberalization to enhance their investment commitments in ASEAN. Indeed, the ASEAN countries and Japan have developed a cordial economic relationship historically. Their interdependence has been further strengthened and enlarged since the 1970s, reflecting recent dynamic globalization of Japanese and other MNCs and the related expansion of trade and investment flows in the world economy in general and the ASEAN region in particular. For example, as seen in Table 9.1, ASEAN's exports to Japan accounted for about 20 per cent of their total amount and their imports from Japan formed about 23 per cent in 1992, which are relatively large shares. Investment from Japan was large as well, which formed 26 per cent in cumulative foreign direct investment (FDI) in Malaysia and 20 to 43 per cent in the other ASEAN countries from 1986 to 1990. If the investments by Asian newly industrializing economies (NIEs) were added, in which Japanese MNCs partly participated in the capital and management, the figures would be bigger. Economic and technical assistance from Japan is also important to the ASEAN countries. It has contributed to a considerable extent in establishing and consolidating the industrial bases in the ASEAN area by constructing industrial infrastructure as well as helping in human resource development, Financial support, technical co-operation, and others under the overseas development assistance (ODA) programme.

Nevertheless, the economic relationship between ASEAN and Japan has been generally dominated by the trade in natural resources and primary products so far. At any rate, ASEAN had been much less important as a trading partner of Japan for manufactured products.